As high-tech companies gathered for the SBIR National Conference in Hartford, Connecticut”™s economic commissioner said the state may free up additional funding for companies to keep them active after their Small Business Innovation Research funding runs dry.
Hosted by the Department of Economic and Community Development, the conference drew some 900 people from government agencies and companies involved with SBIR grants, amid continuing uncertainty over Congressional review of the SBIR program.
The SBIR program is designed to solicit solutions to government problems from engineers and scientists in small businesses, whose ideas might otherwise be muscled aside by large contractors with deep relationships with government agencies. Award winners maintain rights to their intellectual property and are encouraged to commercialize their innovations.
The program awards grants or contracts in two phases, with initial awards as high as $150,000 possibly leading to follow-on awards conceivably worth more than $2 million.
“Once you get into the program, the chances are 50-50 that you are going to be successful,” said Chris Rinaldi, program manager for the U.S. Army”™s SBIR program. “A little over 50 percent of phase II programs are commercialized. That”™s a significant success rate.”
Still, SBIR veterans like Rinaldi note that a cliff exists for companies after their federal funding expires after the three-year cycle covering the two phases of the program. Given the experimental technologies on which they are laboring, companies often require five more years of technical and market research to have a realistic shot at becoming a viable commercial product.
To that end, DECD Commissioner Joan McDonald said Connecticut may consider a “phase III” program of sorts to continue support for those SBIR projects that make it through the federal phase II component of the program.
On a smaller scale, beginning in December, Connecticut began accepting applications for the state”™s new Small Business Innovation and Diversification Program, which makes small matching grants of up to $25,000 for companies developing innovative technologies.
The federal program has scheduled an “SBIR Beyond Phase II” conference for September in San Antonio, bringing together phase II awardees and major conglomerates in a bid to find commercial homes for breakthrough technologies.
One need look no further than Danbury to find a major SBIR success story that did it on its own: ATMI Inc., which today employs nearly 700 people who make and sell high-tech canisters to transport gases in semiconductor and pharmaceutical factories, along with related systems to maintain the pristine working conditions inside such plants.
“ATMI would not exist as a company today but for the SBIR program,” said Deb Santy, program director for the Connecticut SBIR office in Rocky Hill. “They were just five guys with an idea.”
And one need look no further than last fall to find another SBIR success story: A123 Systems Inc., a Massachusetts-based battery maker that collaborated with Fairfield-based General Electric Co. and Bethel-based Duracell before holding an initial public offering last fall en route to building a work force of more than 1,600 people.
In 2009, Connecticut companies secured some 50 SBIR phase I awards and a dozen more in phase II, as tracked by the Connecticut SBIR office, representing declines on both fronts. Still, in fiscal 2008, the Constitution State boasted one of the dozen best rates of SBIR phase I awards as a percentage of applications, at just under 19 percent according to the State Science & Technology Institute.
It is not unusual for a company to be incorporated the day its founders receive an SBIR award, according to Jo Anne Goodnight, SBIR coordinator at the National Institutes of Health.
“We”™re willing to take some risks,” Goodnight said. “We are understanding there are going to be some failures, and that”™s OK.”